ITAT Holds Stamp Vendor’s Cash Deposits Were Fully Recorded:

The assessee filed his return of income for AY 2017-18 declaring total income of Rs 28,05,810. During scrutiny proceedings, the AO examined the assessee’s bank transactions and noted cash deposits of Rs 92.72 lakh between 1 April 2016 and 8 November 2016 and Rs 1.89 lakh between 9 November 2016 and 31 December 2016.

The assessee explained that he was an authorised stamp vendor of the Government of West Bengal and collected money from land purchasers towards stamp duty. The amounts received from customers were deposited into the bank account and thereafter remitted to the stamp valuation authority for issuance of stamp papers. However, the AO treated cash deposits amounting to Rs 96,77,000 as unexplained money under Section 69A of the Income Tax Act, 1961. The addition was subsequently upheld by the CIT(A).

After considering the rival submissions and material available on record, the Tribunal observed that the assessee was an authorised stamp vendor appointed by the Government of West Bengal. The Tribunal noted that this was not a case where money had accumulated in the assessee’s bank accounts over the year. Instead, the amounts were deposited and subsequently remitted to the Government treasury for issuance of stamp papers required for registration of property transactions.

In the present case, the Tribunal found that the money was duly recorded in the assessee’s books of account, deposited into the bank accounts and subsequently remitted to the Government treasury for issuance of stamp papers. Accordingly, the cash deposits could not be regarded as unexplained money under Section 69A. Consequently, the Tribunal set aside the order of the CIT(A) and directed the AO to delete the addition of Rs 96,77,000. The appeal filed by the assessee was accordingly allowed.